A new law governing procurement and assets disposal by public entities in Kenya known as the Public Procurement and Asset Disposal Act, No. 33 of 2015 ( the “Act”) came into force on 7th January, 2016.

Below is a highlight of the provisions of the new Act:

Objective of the Act

The Act gives effect to Article 227 of the Constitution which provides for a system that is fair, equitable, transparent, competitive and cost-effective. The Act also provides for procurement by the county governments and makes provisions for e-procurement.

Application

The Act will apply to all public entities including state organs, departments, state corporations, county governments, companies owned by public entities and bodies in which the national or county government has a controlling interest, among others.

Exclusion

Noteworthy is that the Act will not apply to:

  • procurement and disposal of assets under Public Private Partnership Act, 2013; and
  • procurement and disposal of assets under bilateral or multilateral agreements between the Government of Kenya and any other foreign government, agency, entity or multilateral agency unless otherwise prescribed in the Regulations.

In our view this provision effectively excludes Government to Government contracts from the competitive procurement method.

Repealed law

The Act repeals the Public Procurement and Disposal Act, 2005 which was one of the laws governing public procurement in Kenya but provides that procurements which commenced before 7th January 2016 shall be continued in accordance with the law applicable at the time, among other reservations.

Procurement at the Counties

The County Treasury will be responsible for the implementation of the Act at the county level.

Tender Security

While the repealed Act was silent on the value of the tender security, the new Act now specifies that tender security in any tender shall not exceed 2% of the tender as valued by the procuring entity.

Citizen Contractors and County Reservations

20% of procurement at the County level will be reserved for County residents. Kenyan citizens (or entities in which Kenyan citizens own at least 51% shares) will automatically be entitled to an additional 20% of their total score in certain situations.

Use of ICT in procurement

In line with GoK’s electronic procurement system, Information and Communication Technologies (ICT) may be used in procurement proceedings as will be prescribed in the Regulations.

New procurement methods

In addition to retaining the procurement methods under the repealed Act (i.e. Open Tendering, Restricted Tendering, Direct Procurement, Request for Proposals, Request for Quotations and Low Value Procurement) the new entrants under the new Act include:

  • two-stage tendering;
  • design competition;
  • electronic reverse auction;
  • force account;
  • competitive negotiations; and
  • framework agreements.

Who is a successful tenderer?

Under the Act, the successful tender shall be the one which meets any of the following requirements as will be specified in the tender documents:

  • the tender with the lowest evaluated price;
  • RFP- the responsive proposal with the highest score determined by the procuring entity by combining, the scores assigned to the technical and financial proposals;
  • the tender with the lowest evaluated total cost of ownership; or
  • the tender with the highest technical score, where a tender is to be evaluated based on procedures regulated by an Act of Parliament which provides guidelines for arriving at applicable professional charges

Changes with regard to the evaluation process

  • Post qualification due diligence: Under the new Act, the tender evaluation committee, may, after tender evaluation, but prior to the award of the tender conduct due diligence to confirm and verify the qualifications of the tenderer who submitted the lowest evaluated responsive tender to be awarded the contract.

  • Professional Opinion: Under the new Act, all procurement function in Kenya will be handled by qualified procurement professionals who will be required to give an opinion.

Note: With regard to the above two (2) procedures, the Act is silent on the timelines. The Act is also not express whether a bidder can be disqualified on the basis of such due diligence or opinion. It is also not clear what the due diligence will entail, particularly because it is done after evaluation, and how it reconciles with the provision that a successful tender can be the tender with the lowest evaluated price.

Approval of procurements contracts by the AG

All contracts of a value exceeding five (5) billion shillings will require to be cleared by the Attorney-General before they are signed.

Liquidated damages and interest

Under the new Act, and unless otherwise provided in the particular contract, public entities will be required to pay interest on any overdue amounts while the contractor will be liable to liquidated damages for delayed performance.

Regulating bodies

  • The National Treasury will be responsible for public procurement and asset disposal policy formulation.
  • The PPOA has been replaced by the Public Procurement Regulatory Authority which will play an oversight role with regard to all public procurement in Kenya.
  • The Public Procurement Administrative Review Board which reviews and determines tendering and asset disposal disputes has been retained under the new Act